The Bank of Slovenia has issued a new, downgraded economic growth forecast for this year of just 1.3 percent. In June, the economic growth was forecast to reach 2 percent. The forecast for next year has remained unchanged – at 2.2 percent, while the forecast for 2025 is 0.1 percentage points higher at 2.3 percent. Inflation is expected to be 7.2 percent this year and 3 percent next year. It should be noted that during the Janša government, economic growth was as high as 10 percent!
The Slovenian macroeconomic environment this year has been marked by high inflation and the fading effects of the post-pandemic economic recovery. The news was announced by Tina Žumer, Vice-Governor of the Bank of Slovenia. After quite high growth in the past two years, growth is expected to moderate to 1.3 percent this year, the Slovenian Press Agency reports.
With inflation falling further, real personal incomes rising and export demand picking up gradually, economic growth should also gradually pick up again. Growth is thus projected at 2.5 percent in 2026. The reasons for the economic slowdown this year include lower private consumption and lower international trade, which are expected to pick up again in the coming years.
However, what is worrying is that investments, which have sustained economic growth this year, are set to fall over the next three years. Employment growth is also expected to slow from 3 percent recorded last year to 1.2 percent this year and to around 0.5 percent over the rest of the period before 2026. The slowdown will be felt most acutely in manufacturing, which is already experiencing a decline in export orders and a deterioration in business conditions, and employment is virtually at a standstill, but no increase in overall unemployment is expected.
Inflation will reach 7.2 percent this year
Nominal wage growth will remain high until 2026, at 11.5 percent this year, before gradually moderating thereafter. Wages are also expected to grow in real terms, helping to compensate for the loss of purchasing power in the face of high inflation last year. Inflation will, however, reach 7.2 percent this year, which is 0.3 percentage points lower than in the June forecast, and it is expected to reach 3.0 percent in 2024, which is 0.6 percentage points lower than in the previous forecast. For 2025, the inflation expectation has been revised up by 0.5 percentage point to 3.1 percent.
Domen Mezeg
